The Need for Technical Expertise in Energy
Risks associated with the energy sector are growing in magnitude and complexity. Volatile commodity prices, an ever-changing regulatory environment, aging infrastructure, new technologies, and acquisitions and mergers are primary factors that impact risk profiles for facilities and systems in the energy sector.
The need for technical expertise to help firms manage risk in the energy segment has never been greater. Many companies are taking an essential proactive approach to address this expanded risk profile. On the carrier side, insurance professionals are assisting clients by bringing the full value of technical proficiency to support them, including risk engineers that partner with claims professionals and underwriters to assess risks and collaborate to provide custom risk solutions. This team approach, coupled with a detailed understanding of loss history and prior experience of technical underwriters, contributes to a thorough client risk analysis.
It is important to note that custom risk solutions for energy clients require frequent reviews and periodic updates over time
There are numerous actions a valued insurance partner can offer to assist energy clients with a comprehensive approach to managing their constantly evolving risks. Risk engineers have historically been welcomed by clients to survey energy facilities, evaluate process safety management procedures, present recommendations, consult about capital projects, and develop loss estimates. Coupling risk engineering information with client and industry claims data can greatly assist the client to prioritize risk mitigation and reduction activities and capital expenditure.
It is important to note that custom risk solutions for energy clients require frequent reviews and periodic updates over time. For example, the recent shale gas revolution in North America has shifted feedstocks used to manufacture certain petrochemicals, creating pressure on the production of some that generate less favorable margins.
The systemic risk associated with a disruption in production and transportation of petrochemicals is therefore constantly changing. An experienced technical underwriter, aligned with engineering and claims, can utilize their broad industry knowledge to help clients ensure they have the proper coverage in place as the risk landscape evolves.
Working with a specialist approach to risk assessment in the energy space often revolves around partnership, since collaborating with the broker and client to fully comprehend their exposures can help to develop the most appropriate solution to managing risk. Specialist underwriters can deploy their risk engineers to suggest best practices on risk management and specific mitigation strategies to assist a client in addressing ongoing risks.
This technical process of risk analysis helps a specialist underwriter through interaction with a broker to provide custom solutions that address the complex risk landscape for energy clients. In doing so, an underwriter may consider offering additional capacity for a particular risk, or consider providing specific coverages to develop the right solution for a client’s unique profile. This collaborative approach aims to deliver the most long-term value to the client.